IN THIS ISSUE …

Rather than deal with the ever-changing U.S. tax compliance regulations, ordinary Americans living abroad are giving up U.S. citizenship.

What You Should Know About International Custody Cases

Transnational marriages are becoming more and more common in modern society. If the relationship dissolves, how do courts address child custody?

It’s A Small World After All

With international commerce largely increasing, the use of futures markets has increased as well. How are those using futures markets impacted by CFTC regulations?

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International Practice Spotlight: Anthony L. Millin

Anthony Millin is a trusted legal and business advisor to start-up, early and emerging growth companies. As a corporate and securities attorney, a successful serial entrepreneur and a venture capitalist, he brings a unique legal and business perspective to advising his clients.

Anthony understands first-hand what it takes to start, scale and manage a company, how to prepare for and run a fund raising process, and the way investors look at financing a start-up. This background provides him with valuable insights into the legal and business needs of his clients.

Another specialized skill set Anthony brings to the table is his China-based experience, with which he assists early-stage and middle-market companies interested in conducting business in China or seeking direct foreign investment from China.

Patrick Rathje, President of Ener.co, describes his experience working with Anthony, “Whether we are embarking on a capital raise, negotiating contracts and agreements or developing strategic plans for national and international transactions, Anthony is an integral part of the process. His own experience in launching and building businesses enables him to contribute proven legal and strategic advice to support my company’s success.”

A creative problem solver and strong advocate dedicated to the success of his clients, Anthony frequently serves as his clients’ “outside general counsel”, taking a leadership role in managing the full range of their legal needs.

Americans Continue to Relinquish U.S. Citizenship Under Trump

Americans living abroad continue to relinquish U.S. citizenship in record numbers. A trend started during the Obama administration continues under President Trump as well, and we can thank FATCA for that. The onerous Foreign Account Tax Compliance Act (FATCA) enacted in 2010 directs that non-U.S. banks and financial institutions around the world must reveal American account details or risk big penalties. As a result, Americans living abroad report problems with simple events like opening bank accounts in other countries, because foreign banks are sufficiently worried about keeping the IRS happy that many do not want American account holders. Rather than dealing with the ever-changing U.S. tax compliance regulations, onerous reporting obligations and mounting professional fees to accountants and advisors, ordinary Americans living abroad are taking steps to simplify their lives by giving up U.S. citizenship. Our article will provide an overview of the steps, timelines and consequences for relinquishing U.S. citizenship.

Voluntary Renouncement

The so-called “Voluntary Renouncement” is the most common process used to relinquish U.S. citizenship. Typically, the applicant has two interviews with an officer at a U.S. consulate or embassy abroad. The first interview is an informative meeting designed to confirm the person’s U.S. citizenship, as well as to discuss the consequences of renunciation. After the initial interview, any individual who decides to proceed will be required to undergo a waiting period to make sure that he or she has enough time to adequately ponder the irreversible decision. The required waiting period can be an hour or two at some diplomatic posts and up to three months at other places.

During the second meeting, the individual will be interviewed to assess whether he or she is acting intentionally and voluntarily. Consular officers follow guidelines to assure that the intent is truly voluntary. If so, the consular officer administers an oath of renunciation, and the soon-to-be former U.S. citizen signs an oath or affirmation of renunciation of nationality and a statement of understanding of the consequences and ramifications of relinquishment or renunciation of U.S. nationality. After the oath, the officer prepares a Certificate of the Loss of Nationality that is filed with the U.S. Department of State for final approval. Once approved, the Certificate is mailed to the U.S. Citizenship and Immigration Services (USCIS), as well as the now officially former U.S. citizen.

Former U.S. citizens should be aware that, at this point, unless they already possess a foreign nationality, they may be rendered stateless and lack the protection of any government. Statelessness can present severe hardships: the ability to own or rent property, work, marry, receive medical or other benefits, and attend school may be affected.

Parents Can Not Relinquish on Behalf of Children

Relinquishment of U.S. citizenship has profound and irreversible consequences. Therefore, it is required that the candidate has a voluntary intent to undergo the process – another party cannot express such intent. A minor child requesting relinquishment would likely be doing so due to parental influence, and it is impossible to ascertain whether the child’s intent is completely voluntary.

In fact, consular officers are instructed in the Foreign Affairs Manual that “children under 16 are presumed not to have the requisite maturity and knowing intent” to relinquish citizenship. It is important to note that parents cannot renounce citizenship on behalf of a child once the child has U.S. citizenship. The regulations generally require that a child wait until age 18 to renounce his or her own citizenship if that is the path the child chooses to take.

Immigration Consequences

After relinquishing U.S. citizenship, the former citizen immediately begins to be treated as any other foreign national. For example, in order to enter the U.S. to travel or visit family and friends, the person would need to apply for a visa or a visa waiver. Similarly, in order to work in the U.S., the individual would need to apply for work-authorized status such as H-1B or L-1, or receive an Employment Authorization Document (“EAD”), if eligible. It is important to note that former citizens do not receive preferential treatment when applying for admission to the U.S.

For those with minor children, a U.S. passport or green card may open up opportunities for the child in the future. It is important to note that if a U.S. citizen renounces citizenship, he or she no longer has the legal right to transmit citizenship to minor children.

Moreover, relinquishment of U.S. citizenship is irreversible. Once citizenship is relinquished, any individual wishing to become a U.S. citizen again will need to follow standard immigration procedures: become a legal permanent resident first and apply for naturalization later.

Non-Immigration Consequences

Relinquishment of citizenship may also have unintended consequences affecting taxes, such as an exit tax levied on the person’s global assets. Therefore, it is crucial that anyone contemplating citizenship renunciation should seek advice from an experienced tax professional.

In addition, the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations, including child support payments previously incurred in the United States or incurred as U.S. citizens abroad.

How Can We Help

Shulman Rogers offers a wide range of immigration law services. Please do not hesitate to contact us if you have any questions or if we can be of any assistance.

If you or someone you know has a matter related to international immigration concerns, please call or write Shulman Rogers and mention Alexandra Michailov.

What You Should Know About International Custody Cases

With sustained growth in international tourism, people are more apt to travel abroad, potentially meeting a partner and entering into a transnational marriage. When those relationships dissolve and the custody and rights of a child must be addressed, international families find themselves in a unique and sometimes difficult situation. Custody cases often involve intricate issues, which can be complicated further when more than one legal system is involved. Here are some things to keep in mind if you find yourself faced with an international custody matter.

Consult with an Experienced International Family Lawyer

As in any case, the first thing that should be done is to consult with a lawyer experienced in international family law issues and concepts. International family law is a complex area and involves navigating the interplay between accepted principles of public international law, various multilateral treaties, and the laws of the tribunal(s) where the case may be heard. Oftentimes, international custody disputes involve litigation in more than one country at the same time. For example, a family may reside in one country and a parent may desire to return to their home country with the child. One parent therefore files for custody in the state of Maryland while the other simultaneously files for custody in their home (foreign) country. Under this scenario, one should be represented by a family law attorney in both countries to tackle jurisdiction-specific issues that may arise.

Which Country Has Jurisdiction to Hear a Custody Case

The Uniform Child Custody Jurisdiction and Enforcement Act (“UCCJEA”) establishes the statutory framework that governs the exercise of child custody jurisdiction in Maryland, Virginia, the District of Columbia and most of the United States. The UCCJEA is designed to prevent the exercise of jurisdiction by multiple courts and the existence of multiple contradictory custody decisions. On a basic level, the UCCJEA provides that whichever state or country is the child’s “home state” – determined by where the child has lived for six months – has jurisdiction to make an initial custody determination. It is not always a simple inquiry, however. What if the child has lived in multiple states or has no home state? Under this scenario, a court will look to the state with the most significant connections and available evidence on custody. When attempting to establish the home state of a child, it is important to gather as much information and documentation as possible to support the claim that a particular court should hear the case.

Concerns That a Child May Be Removed From the United States

For countries which have ratified the Hague Convention, the Convention provides a mechanism for courts of a member country to order the immediate return of a child who is taken from their country of habitual residence in violation of custody rights. While the application of the Convention has been successful in returning children who have wrongfully been removed or retained in a member country, exercising best practices to prevent a wrongful abduction is critical. Parents should pay attention to certain risk factors or indications that a child is at risk from being removed from the country, such as a parent abandoning employment, selling a primary residence, obtaining passports for a child, closing bank accounts, and historical threats made by a parent. Acting quickly to protect a parent’s rights and prevent the unlawful removal of a child from their home is paramount.

Shulman Rogers’ attorneys can guide you through international custody cases. If you are in need of an international family law attorney, please call or write Shulman Rogers and mention Akinyi Orinda.

It’s A Small World After All

Individuals and companies are engaging in international commerce with greater frequency and on a larger scale than ever before. Improvements in technology, shipping and transportation allow access to market participants who previously would have found such activity impossible. However, as opportunities increase, so does risk. What if, between the time a shipment leaves a port in Los Angeles and reaches its destination in China, the value of the U.S. dollar as compared to Chinese renminbi changes? What if the cost of wheat to make cereal changes between the time the plant contracts to ship a load of boxes at a set price and the time it actually receives the wheat to process into cereal?

To offset these risks, more and more individuals and companies are participating in the futures markets. The markets are no longer a frenzied pit limited to agricultural futures products such as corn, wheat, pork bellies, or frozen concentrated orange juice as in the movie Trading Places. Now, the United States futures markets provide a mechanism for market participants to hedge the risks they face every day in business, with electronic trading available 23.5 hours a day on thousands of futures contracts from almost anywhere in the world.

By doing so, however, traders from outside the United States may not realize that they are subjecting themselves to the jurisdiction of United States regulators. U.S. Commodity Futures Trading Commission (CFTC) regulations provide that any foreign trader who uses a U.S. futures commission merchant (which is similar to a broker-dealer) by default designates that futures commission merchant as his or her agent for purposes of accepting service of process or any other communications from the CFTC. It is up to the futures commission merchant to notify its customer, the foreign trader. Many futures commission merchants make such notifications via e-mail or through own account notification system as provided in their client agreements.

As a result, the CFTC may bring a suit against the foreign trader, freeze all of the funds in the foreign trader’s account with the futures commission merchant, and possibly obtain a judgment against the foreign trader with the foreign trader’s only notice being in the form of e-mail. The process can often be quite swift, so it is imperative that any foreign trader who receives notice of such an action hire U.S.-based counsel immediately to protect his or her rights.

Private parties who may have been defrauded or fallen victim to a manipulative scheme by a foreign trader in connection with futures or forex do not have the same ease in suing foreign traders. The regulation that designates futures commission merchants as agents of foreign traders does so only for service and communications on behalf of the CFTC. U.S.-based victims must serve the foreign trader via traditional means such as the Hague Convention or letters rogatory. This process can be lengthy and the assets may be harder to trace and recover as time passes. Recent U.S. case law has also limited the territorial reach of the Commodity Exchange Act in actions between private litigants. Once again, it is imperative that any individual or company that believes it is the victim of fraud in connection with a futures or forex transaction should contact counsel immediately to evaluate the merits of such a claim.

Shulman Rogers has extensive experience responding to inquiries from U.S. financial regulators. Our attorneys have served as enforcement counsel at the CFTC, SEC and PCAOB. If you need assistance in evaluating claims involving regulators and private litigants, please call or write to Shulman Rogers and mention Allison Baker Shealy.

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